absorption costing


Also found in: Financial, Wikipedia.
Related to absorption costing: marginal costing

absorption costing

n
(Accounting & Book-keeping) a method of cost accounting in which overheads are apportioned to cost centres, where they are absorbed using predetermined rates. Compare marginal costing
References in periodicals archive ?
Costing techniques provide a case in point, with the gradual move from absorption costing to activity-based costing and then to time-based activity costing.
The primary subject matter of this case concerns income inflation opportunities when GAAP based absorption costing is used as compared to internally used variable costing when more inventory is produced than sold.
Absorption costing and marginal costing systems contrasted.
The final section covers traditional managerial accounting topics of classifying costs, job order costing, direct and absorption costing, and standard costing.
In income statements prepared under absorption costing and variable costing, where would you find the terms contribution margin and gross profit?
This task is absorption costing, of which ABC is simply an advanced form.
Robert, having consulted with the company's former CPA, was aware the business had always used absorption costing for external reporting purposes as required by U.
Many accounting experts in the eighties and nineties argued that absorption costing, which had been developed at the turn of the 20th century, needed to be replaced by new costing systems that were more appropriate for modern business.
Because each production man-hour rate will be unique, full absorption costing breaks up all plant expenses and allocates them to the various production departments so they will be included in the departmental man-hour rates.
A difficulty inherent in the absorption costing approach is the issue of fixed overhead costs.
It seems that a basic absorption costing method is used whereby overheads are pooled and then allocated to product lines according to simple drivers such as volume.